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BENEFITS STRATEGY & BENCHMARKING SURVEY EXECUTIVE SUMMARY & STRATEGIC INSIGHTS 2017 Guiding Your Ascent with Data
BENEFITS STRATEGY & BENCHMARKING SURVEYEXECUTIVE SUMMARY & STRATEGIC INSIGHTS
2 0 1 7
Guiding Your Ascent with Data
Arthur J. Gallagher & Co. AJG.COM 1
Survey Overview ........................................................................................2
Key Findings & Implications .........................................................................4
Final Remarks ............................................................................................8
About Gallagher .........................................................................................9
Contributors .............................................................................................10
Table of Contents
This Executive Summary focuses on the key findings of our research — insights drawn from significant patterns identified within the data — and their strategic implications.
2017 BENEFITS STRATEGY & BENCHMARKING SURVEY Executive Summary & Strategic Insights 2
SURVEY OVERVIEW
Survey Overview Staying on top of benefits and human resource changes takes endurance. When climbing an ever steeper competitive
slope, employers need the latest information on how to negotiate unsteady terrain such as new regulations,
demographic shifts, and technology disruptions in revenue and profit models. Gallagher’s 2017 Benefits Strategy &
Benchmarking Survey provides data and insights that help steadily guide you along the path to peak performance.
Gallagher’s comprehensive survey, conducted from January to March 2017, aggregates responses from 4,226
organizations across the United States. More than 300 questions covering the total compensation spectrum were
included, using data parameters that allow you to focus on results specific to your relevant market.
In addition to this Executive Summary, a comprehensive U.S. National Report is available covering major
benefits and related categories. They include Human Capital Strategy, Medical Benefits, Employee Wellbeing,
Employee Communications, Employee Engagement, Dental Benefits, Life Insurance & Voluntary Benefits, Absence
Management, and Retirement Benefits. Each section features core data highlights and wraps up with key takeaways,
followed by tables that show participants’ responses to survey questions. From broad insights to specific findings, you
gain a practical perspective on significant trends and best practices that Gallagher is observing firsthand.
To discuss your human capital vision and strategies for reaching new heights of performance, contact your local
Gallagher representative or one of the advisors listed on the back cover.
60%FOR PROFIT
40%NONPROFIT
Ownership Structure
11%
30%
16%
26%
17%
SOUTHEAST
Geography
SOUTH CENTRAL
NORTHEAST
WEST
NORTH CENTRAL
Workforce Size — Full-Time Employees (FTEs)1
SMALL EMPLOYER — UNDER 100 FTEs
LOWER MIDSIZE EMPLOYER — 100 to 499 FTEs
UPPER MIDSIZE EMPLOYER — 500 to 999 FTEs
LARGE EMPLOYER — 1,000 OR MORE FTEs
46%
33%
9%
11%
1Due to rounding, percentages do not total 100%
Arthur J. Gallagher & Co. AJG.COM 3
SURVEY OVERVIEW
PUBLIC ENTITY
441MANUFACTURING
550HEALTHCARE
418EDUCATION
509
BUSINESS SERVICES
359FINANCIAL SERVICES
240
TECHNOLOGY
214
CONSTRUCTION
277SOCIAL SERVICES
223
ENERGY
116
RETAIL
212WHOLESALE
133HOSPITALITY/RESTAURANT/
ENTERTAINMENT
160
TRANSPORTATION
121ASSOCIATIONS
89LEGAL
75
RELIGIOUS INSTITUTIONS
58PHARMACEUTICAL
31
Number of Participating Organizations by Industry
2017 BENEFITS STRATEGY & BENCHMARKING SURVEY Executive Summary & Strategic Insights 4
KEY FINDINGS & IMPLICATIONS
Key Findings & ImplicationsMuch like mountain climbers aspiring to reach the summit, employers are striving to achieve 360-degree integration across total compensation strategies and programs. A big-picture perspective makes it possible to more fully address employee wellbeing and human capital talent needs while controlling costs and managing risk. As employers gain a deeper understanding of how these elements work together, they can see more clearly how to align human resource and organizational strategies to drive better business results.
Human resource departments serve as a base camp for
organizational effectiveness. In fulfilling this function,
they face persistent challenges, including changing
workforce demographics, regulatory complexity and a
competitive labor market. This summary offers insights
to help employers execute on three key steps — assess,
map, and climb — so they can overcome obstacles on
their way to growth and profitability.
AssessEmployers are at different places on the path to
an integrated, holistic approach to benefits and
compensation. They use different sets of tools to meet
their goals and are equipped with different experiences
and expertise. Regardless, benchmarking data can
anchor them along the way with insightful analysis of
their current programs, policies and incentives, framing
their expectations and identifying gaps. Key insights
related to assessment — the first foundational step —
are described on the next page.
COMPENSATION
360-degree view
WELLBEING
COMMUNICATIONS
ENGAGEMENT
DENTAL
LIFEINSURANCE
VOLUNTARY
ABSENCE MANAGEMENT
RETIREMENT
MEDICAL AND PHARMACY
Arthur J. Gallagher & Co. AJG.COM 5
KEY FINDINGS & IMPLICATIONS
Evolving employer priorities reflect a need to make
the most of human capital investments and drive
business growth.
• Attracting and retaining a competitive workforce
is the top operational priority for 58% of
employers, and attracting (43%) and retaining
(41%) talent rank as the second and third most
important HR priorities.
• Controlling benefit costs remains the highest HR
priority at 52%, but declined slightly in overall
importance compared to 2016. However, boosting
workforce engagement and productivity (37%)
and creating a strong workplace culture (33%)
increased in importance.
• Properly administering and managing lost time
is a top pursuit for 62% of employers, including
Family Medical Leave Act (FMLA) compliance,
incidental absences, short-term disability, workers’
compensation, and related implications of the
Americans with Disabilities Act (ADA) and the
ADA Amendments Act.
Employers are still challenged by talent acquisition and
retention, healthcare costs, wellbeing and engagement.
• Nearly one-third or more midsize and large
employers report 15% or greater turnover in
full-time employees.
• Increases in employee contributions to the cost of
premiums (48%) and higher cost sharing through
plan design changes (48%) remain the top two
healthcare cost-control tactics.
• While promoting health and wellbeing is an
organizational priority for over two-thirds of
employers, just 52% believe they have an effective
wellbeing strategy.
Tactics are often hindered by a lack of strategy,
highlighting opportunities to get better value from
health and human capital investments.
• An increased use of tactics to improve employee
engagement occurred across all sizes of employers,
especially large employers that reported double-
digit increases for all tactics. Yet, less than half
of employers (44%) report a formal strategy to
strengthen employee motivation, satisfaction and
commitment to the organization.
• Approximately two-thirds of employers offer long-
term disability and short-term disability or salary
continuation. Far fewer (44%) have developed an
absence management strategy for administering
leaves for both occupational and non-occupational
disabilities.
Map Once employers have clearly and completely assessed
the status of their compensation and benefits, they’re
prepared to determine where to go next and what it
will take to achieve their goals. This next step includes
thoughtful, integrated planning that connects the
dots between compensation and benefits, policies,
and program offerings — as well as organizational
objectives. Directional insights below point to
opportunities for increasing the planning time horizon
and for striving toward greater alignment between HR
strategies and business goals.
The potential to drive business performance by aligning
compensation, benefits and communication strategies
is often overlooked.
• Half of employers view compensation and benefits
as tools to attract and retain talent. Just 31%
regard compensation and benefits as investments in
maximizing workforce performance and achieving
business objectives.
• Employers identified greater effectiveness of their
communications as the most helpful solution for
managing HR-related challenges and opportunities
(62%). Yet, only 15% have a comprehensive
communication strategy. Employers typically
use communication strategies for some of their
programs such as safety, wellness and benefits
enrollment, but not all (70%).
2017 BENEFITS STRATEGY & BENCHMARKING SURVEY Executive Summary & Strategic Insights 6
KEY FINDINGS & IMPLICATIONS
Some employers seek advisors as extensions of their
organization to help them navigate difficult benefit-
related tasks, and identify opportunities to improve
outcomes based on marketplace insights and expertise.
• For communications, most employers shifted
toward greater use of external support, including
38% overall and 53% of large organizations that
count on the help of vendors. At the other end of
the spectrum, just 3% overall and 11% of large
employers work with consultants that specialize
in this discipline.
• Sixteen percent (16%) of employers rely on health
plan vendors to administer wellness programs and
14% enlist the expertise of an outsourced wellness
vendor, including 24% of large.
• For pharmacy benefits, 19% of all and 50%
of large employers use a specialty pharmacy
benefit manager.
Long-term planning and a broader wellbeing strategy
that promotes employees’ physical, emotional,
financial, social and career health are gaining ground.
• While more than 70% of employers plan benefits
and compensation strategies annually, a higher
percentage reported a multi-year strategy for both
benefits (12%) and compensation (14%) in 2017.
Long-term planning is more common among upper
midsize and large employers.
• Growth in the adoption of wellness programs is
expected with 29% of employers planning to add
this benefit by 2019, potentially increasing total
use to 70%. Offerings are expanding to reflect
a broader wellbeing focus with 28% connecting
employees to volunteer opportunities, 27% fostering
community engagement and 18% offering other
social wellbeing initiatives.
• Financial wellbeing opportunities are promoted
by one-third of employers. Nearly half use auto-
enrollment for retirement planning to help employees
improve savings on target with their goals.
CLIMB
ClimbMeaningful changes to organizational culture take time,
including the engagement and wellbeing of employees.
The most successful employers pursue their long-term
goals with resolve, taking small and distinct steps to
measure progress. Those that have baseline measures
in place are looking to pair these data outputs with data
inputs from employees, gathered from their formalized
feedback on engagement and wellbeing. Through these
efforts, employers are better able to tie metrics on
healthcare costs, productivity, employee engagement
and other focal areas to broader strategic goals such
as market share, revenue and profitability. Insights
from the results of this process can drive continuous
improvement of employee engagement. The key
findings below are evidence of employers’ openness to
considering and adopting different and newer methods
of cost control that support employee needs. While
there’s more reliance on data to drive informed benefits
and compensation planning decisions, measurement
of programs currently offered to employees is a missed
opportunity for many.
Self-insurance, quality-focused and value-based tactics,
and consumer-directed health plans are incremental
steps employers are taking to control healthcare costs
and achieve employee wellbeing goals.
• There is a trend toward increased self-insurance of
medical plans among lower midsize (42%), upper
midsize (68%) and large employers (83%), up 8 to
10 percentage points from 2016.
• One-third or more of employers use quality-focused
and value-based tactics to control medical costs,
including cost-transparency tools, telemedicine, and
healthcare decision support for employees. Some
of the tactics employers expect to adopt by 2019
include cost-transparency tools (24%), healthcare
decision support (19%), and reference-based pricing
for healthcare services (11%).
• Looking to engage employees in their health and
healthcare spending, 44% of all and 72% of large
employers offer a consumer-directed or high-
deductible health plan.
Arthur J. Gallagher & Co. AJG.COM 7
KEY FINDINGS & IMPLICATIONS
More employers need a reliable way to gauge the
effectiveness of programs and tactics used to enhance
the employee experience and strengthen engagement.
• The primary measure of communication success
is employee feedback and questions asked of
HR (74%). Large employers also rely heavily on
healthcare benefit enrollment trends (62%).
• Just 32% of all and 53% of large employers
conducted an engagement survey from 2015 to
2016, and 9% of those that didn’t run a survey
plan to do so by 2019.
• Among the 78% of employers that offer a
retirement program, only 37% take steps to
measure employee retirement readiness.
• While three-quarters of employers evaluate
wellness program performance, employee
participation is the leading indicator at 58%. Few
look at financial claims data (21%), the impact on
lost work time (6%) or lost productivity (3%).
Data increasingly helps employers prepare, refine and
reroute when environment or business dynamics shift.
• For benefits planning, the data source most
referenced by employers is their organization’s
current and projected financial performance at
68%. The use of benchmarking (59%) and multi-
year labor cost modeling (13%) rose in 2017.
• Compensation planning trends show more
application of all data types and resources except
for workforce characteristics. Double-digit increases
in the use of benchmarking information were
reported by 89% of large and 82% of upper midsize
employers. For upper midsize employers alone,
there was also a significant increase in factoring
their organization’s current and projected financial
performance (69%) and strategic plan (51%).
Achieving sustainable costs while engaging employees
and driving business growth can seem as precarious
as scaling Everest or ascending Denali. Yet, more
employers are building momentum for a fuller
employee experience of wellbeing that integrates
emotional, financial, social and career dimensions with
physical health. There’s also a trend toward easing cost
pressures by changing funding strategies, adding value-
based and quality-focused benefits, and encouraging
healthcare consumerism. Those that aspire to compete
at the highest level as a destination employer are
setting their sights on a more holistic and integrated
approach to total compensation management.
Increased data integration, longer-term planning and
the strategic use of external advisors help guide them
along this path.
Data-driven insights show many opportunities for
making steady progress toward better value from
health and human capital investments. When
employers assess total compensation trends — and
then map, measure and realign strategies and solutions
— they continue to reach new heights.
2017 BENEFITS STRATEGY & BENCHMARKING SURVEY Executive Summary & Strategic Insights 8
View the latest reports at ajg.com/thoughtleaders
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Best-in-Class Benchmarking Analysis
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Human Capital Insights Report
2018
Final RemarksThe key findings and implications in this report offer you a data-guided compass for improving your marketplace
standing — including an ascent to destination-employer status. Employers are setting their sights on a broader
set of benefits to proactively address employee needs and human capital objectives while controlling costs and
managing risk. With a multi-year, holistic and integrated approach to human resource strategies, you can drive
better business results by creating the right environment for you and your employees to achieve targeted outcomes
and sustain success.
Additional Gallagher Thought LeadershipYear-round data and expertise on marketplace trends to help you drive decisions.
This Executive Summary is one of a series of benefits benchmarking and human resource reports produced
by Gallagher throughout the year. Together, they provide ongoing context and direction for helping you
optimize your human capital investment.
FINAL REMARKS
Analysis based on our annual survey that takes benchmarking a step further, shifting the focus away from “average” to give you perspective on what it takes to be a top-performing employer.
Annual survey providing insight into where you stand compared to your peers, so you can make data-driven decisions more closely aligned with your business performance goals.
Comprehensive outlook on current trends and strategies to help you successfully attract and engage top talent, control healthcare costs, increase employee total wellbeing and manage risk.
Arthur J. Gallagher & Co. AJG.COM 9
About Gallagher If you could name one thing that drives your organization’s success, what would it be? Chances are, it’s your employees.
Attracting and retaining the right talent is a top priority for most organizations, but they struggle with managing the
costs in a highly competitive and complex climate. To secure your place as a destination employer, you need the right
data to make smart benefits decisions, to keep a firm grasp on the state of the employee benefits market, and to
focus on the needs of a diverse workforce while effectively communicating the value you offer your employees.
You’re not on this journey alone. Gallagher will work closely with you to map out a strategic, measurable and
customized plan that helps you invest wisely in your workforce. All aspects of your HR programs — compensation,
benefits, wellbeing, communication and culture — need to work together to effectively manage the risks associated
with your human capital. By developing benefit and HR programs that support a multigenerational workforce, you’ll
create a culture that’s focused on organizational health and your employees’ total wellbeing.
When you take this holistic approach to investing in your employees, you’ll have an engaged team that’s more
productive, more loyal and willing to support your organization’s journey to success. You’ll be in a strong position to
attract and retain the best talent and to prosper as an organization.
Arthur J. Gallagher & Co. (NYSE: AJG), an international insurance brokerage and risk management services firm, is
headquartered in Rolling Meadows, Illinois, has operations in 33 countries and offers client-service capabilities in
more than 150 countries around the world through a network of correspondent brokers and consultants.
ABOUT GALLAGHER
17GBS25075B
CONTRIBUTORS
TERMS OF USEThe intent of this Survey is to provide you with general information regarding current practice within the employee benefits environment. The data does not constitute recommendations or other advice regarding employee benefit programs, and the user is in no way obligated to accept or implement any information for use within their organization(s). The decision to utilize any information provided rests solely with the user, and application of the data contained does not guarantee compliance with applicable laws or regulations regarding employee benefits. Information provided by the Survey, even if generally applicable, cannot possibly take into account all of the various factors that may affect a specific individual or situation. Additionally, practices described within the Survey should not be construed as, nor are they intended to provide, legal advice.
The Web Site and the Content do not constitute accounting, consulting, investment, insurance, legal, tax or any other type of professional advice, and should be used only in conjunction with the services of a Gallagher consultant and any other appropriate professional advisors who have full knowledge of the user’s situation.
Gallagher does not represent or warrant that the Content will be correct, accurate, timely or otherwise reliable. Gallagher may make changes to the Content at any time. Gallagher assumes no responsibility of any kind, oral or written, express or implied, including but not limited to fitness for a particular purpose, accuracy, omissions and completeness of information. Gallagher shall in no event whatsoever be liable to licensee or any other party for any indirect, special, consequential, incidental, or similar damages, including damages for lost data or economic loss, even if Gallagher has been notified of the possibility of such loss. For the purposes of this section the term “Gallagher” shall be construed so as to include Gallagher Surveys as a marketing division and/or Gallagher Benefit Services, Inc. and its affiliates.
Consulting and insurance brokerage services to be provided by Gallagher Benefit Services, Inc. and/or its affiliate Gallagher Benefit Services (Canada) Group Inc. Gallagher Benefit Services, Inc., a non-investment firm and subsidiary of Arthur J. Gallagher & Co., is a licensed insurance agency that does business in California as “Gallagher Benefit Services of California Insurance Services” and in Massachusetts as “Gallagher Benefit Insurance Services.” Certain appropriately licensed individuals of Arthur J. Gallagher & Co. subsidiaries or affiliates offer securities through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC and or investment advisory services through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Neither Kestra IS nor Kestra AS is affiliated with Arthur J. Gallagher & Co., or Gallagher Benefit Services, Inc. Neither Kestra AS, Kestra IS, Arthur J. Gallagher & Co., nor their affiliates provide accounting, legal, or tax advice. GBS/Kestra-CD(251617)Exp(072018)
© 2017 Gallagher Benefit Services, Inc.
All rights reserved. No part of this book, including the text, data, graphics, interior design and cover design may be reproduced or transmitted in any form, without explicit consent from Arthur J. Gallagher & Co.
Gallagher Benefit Services, Inc.www.ajg.com
Absence & Disability Agnes Nines [email protected]
CommunicationsMatt Frost [email protected]
Pepper Krach [email protected]
Dental Scott Morsch [email protected]
Graham Thompson [email protected]
Engagement Chris Dustin [email protected]
David Rowlee [email protected]
Life InsuranceJohn Neumaier [email protected]
MedicalKevin Cipoletti [email protected]
Chris Shofner [email protected]
Adam Wolff [email protected]
Barbara Yoshimura [email protected]
Pharmacy Mark Rosenberg [email protected]
Private ExchangeRick Strater [email protected]
Research & ReportingStephanie Bauman [email protected]
Chuck Reynolds [email protected]
RetirementDean Clune [email protected]
Bill Kline [email protected]
Survey Development Thomas Cummins [email protected]
Total RewardsScott Hamilton [email protected]
Kent Lonsdale [email protected]
Joseph Milano [email protected]
VoluntaryTim Easterwood [email protected]
Jim Evans [email protected]
WellbeingRebecca Kruske [email protected]
Ali Payne [email protected]
Kathleen Schulz [email protected]
Contributors
